| |
Investing in Iraq’s Industry
19-20 April 2008
Dubai
Summit Report |
|
|
 |
|
|
An exciting new phase of industrial development within Iraq was promised following the successful completion of the ‘Investing in Iraq’s Industry’ Summit in Dubai this week. The summit, organised under the Ministry of Industry & Minerals and featuring over 85 officials including Minister Fawzi Hariri, brought the international business community to the UAE to hold discussions with Director Generals from Iraq’s various state owned companies.
The development of industrial sectors such as cement, iron and steel, engineering, fertiliser, glass and ceramics, mechanical industries, automotive industries, electrical industries and information systems is seen as essential in enabling Iraq’s economic transformation, as it seeks a change from a state controlled economy to a more free market based approach.
Negotiations were held over the course of the two days between state company director generals and international operators to determine the level of investment needed to bring the various factories and plants towards capacity. |
The summit heralds the start of a process of commercialisation designed to eventually bring about similar economic benefits to those provided by fully fledged privatisation. Minister Hariri, whose vision and leadership enabled the summit to take place, proclaimed the event as a natural progression, following the issuing of a small number of tenders in 2007.
Iraq’s Ministry of Industry & Minerals consists of 60 companies, with around 240 factories and plants located throughout the country. It is estimated that around $2 billion needs to be generated to bring these facilities up to date. Minister Hariri has already declared that the Ministry is “making all of Iraq’s state owned enterprises available for partnerships with the private sector,” adding that despite the many challenges faced within the country the rewards for potential investors are considerable.
It is anticipated that a number of other joint ventures will be signed in the coming weeks, following the successful negotiations enjoyed at the summit. An investment board has already been set up; to oversee direct investment into Iraq and aid the development of SOEs through ensuring a more streamlined decision making process.
|
|
|
| With no privatisation law at present, the forming of joint ventures based on the concept of production sharing is seen as the best way of generating the investment needed to revitalise the Iraqi economy. By investing in industrial infrastructure, international companies can negotiate a return percentage of the profits from the state company’s output, raising productivity, bringing in new technology and bringing the facilities up to international standards. |
Prestigious Opening
The summit began on the morning of Saturday 19 April, with a welcome address from Minister Hariri, who stressed that now was the time for the dawning of Iraq as an economic power. The Ministry is now looking to change its role as a holding company for SOEs to a development agency for the stimulation of the industrial sector and regulatory agency for the private sector, increasing the industrial output of its SOEs and private sector companies and subsequently increasing the country's Gross Domestic Product (GDP), promoting entrepreneurialism, innovation and business creation.
Minister Hariri was followed by US Deputy Under Secretary of Defence Paul Brinkley, who leads the US Task Force for Business and Stability Operations in Iraq, which works to help revitalise the Iraqi industrial economy. The Task Force, an official partner for the summit, has been working with the Government of Iraq to restore production in Iraqi industry and to facilitate private direct investment, global supply agreements and joint ventures in Iraq. Speaking at the summit, Mr Brinkley said that Iraq is now in a much better position to negotiate with potential investors.
“We are really seeing a groundswell at the moment. It is leading edge, with the most risk-oriented investors now coming in,” he said. “The event provides the evidence that Iraq is now open for business.”
The opening also featured Abdul Aziz Al Ghurair, Speaker of the House of the Federal National Council (FNC) within the UAE Parliament, who spoke of the pride felt within the UAE at the choosing of Dubai as the venue for such an important summit.
|
|
|
| The opening was followed by a lengthy panel session on the importance of investment, which featured Deputy Industry Ministers Adil Kareem Kak Ahmed and Sami Raouf Al-Araji, ‘Mixed Sector’ Company Director Ahmed Abdulrafea Yaseen Al-Uraiby and Haifa Abdulhamid Abdulghani, Director General for the Ministry Investment Directorate. Further contributions were made by the Trade Bank of Iraq and Zain Iraq, both of whom were sponsors of the event, the latter providing a first hand account of their experiences in doing business in the country.
With the afternoons given over to private scheduled meetings between investors and Iraqi SOEs, international companies and consortia had the chance to discuss the opportunities and challenges provided by Iraqi industry, with key issues including training, connecting state institutions to new market structures, staffing, improving technology, streamlining procedures and overcoming existing limitations. These meetings were held in 30-minute slots, enabling negotiation and discussion on all aspects of any potential joint venture. Over 50 different meeting tables were available for companies to meet with, all providing commercial opportunities within these highly lucrative sectors.
|
Sector Overviews
The second day of the summit saw proceedings begin with sector-specific addresses from the Director Generals charged with overseeing the various industry sectors within the Ministry, which are split into construction, engineering, food and pharmaceuticals, chemicals and petrochemicals, industrial services and textiles.
Faris Taha Abdulhameed, Director General for Chemical & Petrochemical Industries spoke first, outlining a five-year vision for the sector which includes the eventual utilisation of 25-30% of natural gas resources and increasing the availability of raw materials such as sulphur, phosphate, sodium, kaoline and limestone.
|
|
|
| Dr Hamoudi Abbas Hameed, Director General for Food & Pharmaceutical Industries, spoke of Iraq as a major food consuming nation, but one that was currently meeting less than 20% of demand, despite the strong reputation of Iraqi produce. His address also discussed the leading state pharmaceutical companies Sammara and Nainava, as well as proclaiming that many plants within the dairy industry have the opportunity to dramatically improve capacity over the coming months. He concluded his address by acknowledging the high demand placed on the State Company for Tobacco & Cigarettes, which currently produces 500,000 cartons of cigarettes per year with demand at 3.5 million cartons.
Ali Saleem Omar, Director General for Construction Industries, acknowledged that his sector is crucial to the future of Iraq: “They have suffered three decades of continued instability, but now there are opportunities to use new techniques”.
Omar expressed optimism that with current capacity from the three principal plants at 6.4 million tonnes and with potential for a full electricity supply, new investors should be able to increase output with a minimum of maintenance. He did however also stress that investors should have a clear business plan and should be under no illusions over the challenges posed in Iraq, justified by the huge potential rewards.
Abdulghani Fakri Al-Jafer is Director General for Textiles Industries, a key sector for employment and also one where the majority of production is distributed domestically. Regarding the eight state companies operating within the sector, which also include furniture and leather goods, Al-Jafer spoke of the need for interacting more closely with the local private sector. Production within the sector is currently sufficient to meet only 10-20 per cent of local demand, with material quality an issue, not just for clothing but also for tents, carpets, shoes, bags, furniture and other products.
$22 million was recently allocated for the rehabilitation of production lines for cotton, including a facility in Kirkuk, with the sector still partially dependent on protection from cheaper markets such as China.
|
Sufyan Sulaiman Sedeeq, Acting Director General for Industrial Services, praised the group of companies operating under his sector for being highly active, both as advisory consultants and as project implementers within the information technology and engineering sectors.
Sedeeq proclaimed the skills base within Iraq as considerable, for design and turnkey project management across civil, mechanical and electrical engineering. Particular reference was made to the likes of the State Company for Information Services (ISC) and the General Systems Company (GSC), the latter being singled out as the only company specialised in electrical power control systems within the oil and gas sector, and one that has huge potential.
He concluded that the vision for his sector – which also includes solar power projects and public lighting installations – is simply huge, as the Ministry looks for international companies to support them with new techniques.
The sector sessions concluded with Taha Hussein Ali, Acting Director General for Engineering Services, who articulated the demand for various products within the non-ferrous engineering industry. Iraq has large reserves of scrap steel, which combined with its aluminium and copper supplies is estimated at 15 million tonnes. Demand is also high for spare parts and for advanced technologies.
The sector overview was followed by a session on the legal aspect of investing in Iraq, chaired by Timothy B. Mills, President of the American Chamber of Commerce-Iraq and also featuring Dr Fadel Jawad Kadhum, Iraqi Prime Minister Nouri Al-Malili’s Advisor for Legal Affairs.
|
|
|
| The morning session concluded with a panel discussion, where questions were invited from the floor on what had gone before, providing the opportunity for delegates to engage in dialogue with representatives from the Ministry, Grant Thornton, CSC and the International Engineering Group
‘Commerce at Work’
The summit concluded with a prestigious signing ceremony, which saw Minister Hariri act as signatory for two new private-public partnerships for Al Qaim Cement and Al Kirkuk Cement Company, both plants within the Iraqi Cement Company, which operates under the Construction Sector Directorate.
The bid to restart the Al-Qaim cement plant in the far western region near the Syrian border has been secured by a consortium featuring the Iraqi company Al-Jawhara al-Khalijiyah and its Romanian partner Uzen, while another Iraqi company, Al-Sharq al-Awsat leads a German-backed consortium to take over the plant in the northern oil hub of Kirkuk.
"We are making all of Iraq's state-owned enterprises available for partnerships with the private sector," Hariri said. “For the last three to four years, there has already been a stable market in the North, and recently we have had a positive indication that these Northern business ventures are moving into Baghdad.
“We have signed two very important contracts today for the cement industry, whereas in fact following the meetings of the past two days, I could have signed ten other similar deals,” he added. “But as a government body the rule is that the minister cannot just come and sign a contract. It has to follow due process in Iraq. But we have signed these cement contracts within ten months, which is fast for Iraq.”
The signing of the joint venture partnerships has been heralded as seen an example of the summit’s mandate at work, while Minister Hariri has stated that he expects around another 20 agreements to be concluded within the coming weeks as a result of the negotiations held at this hugely successful event.
|
D ownloadable Presentations |
| |
|
|
|
IDP Erbil Announced
In partnership with the Government of the Republic of Iraq and the Kurdistan Regional Government (KRG) we are proud to announce the first official Iraq Development Summit to take place in Erbil on 8-9 October 2008.
Following the success of the last fours years of high level business summits, IDP is now bringing its unique event format back to Iraq, enabling senior decision makers from the Government of Iraq and KRG to meet with international operators across the country’s key sectors, including construction and engineering, electricity, water and utilities, health and pharmaceuticals, information and communication technology, petrochemicals, security, transport and trade.
The summit will take place in Erbil, within the Kurdistan Region of Iraq, on 8-9 October 2008. Based on a format that has proved hugely successful in facilitating business interaction between officials and senior corporate executives, the summit will focus on the building of close relations through private face-to-face meetings.
The success of this meetings-based structure has been based on the establishment of trusted relationships between the private sector and ministries and state-owned enterprises, establishing joint venture agreements, forming partnerships for production output and supplying key goods and services. For more information please visit the dedicated summit webpage or email info@developmentprogram.org.
|
|
|
|
Registering for the summit
To register for the IDPE Summit, please select from the list of options below, or request a call back from the IDP team, who'll be happy to help work out the best option for you. |
| HOW TO REGISTER FOR THE SUMMIT |
| |
|
|
|
|
| Sponsorship Packages and Delegates |
|
Registration PDF |
|
Request a call back |
| |
|
|
|
|
| Exhibition Packages |
|
Registration PDF |
|
Request a call back |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Diamond Sponsor |
| |
|
| |
| Platinum Sponsor |
| |
|
| |
| |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
 |
| |
|
| |
|
| |
 |
| |
|
| |
|
| |
|
| |
|
| |
|
